14

JAYPEE GROUP

BY JAGMOHAN YADAV
SS(09-11)
Overview

CEMENT INDUSTRY
India is the second largest producer of cement in the world. The production of cement in India has
increased at a compound annual growth rate (CAGR) of 9.7 per cent to reach 272 million tonnes
(MT) in the period 20062013. It is expected to touch 407 MT by 2020.

India's potential in infrastructure is vast. It has the capacity to become the world's third largest
construction market by 2025, adding 11.5 million homes a year to become a US$ 1 trillion a year
market, according to a study by Global Construction Perspectives and Oxford Economics. This
opens up a tremendous window of opportunity for the countrys cement industry.

Notwithstanding its current position one of the leaders in cement production, Indias riches in the
sector remain somewhat untapped. Lafarge's India business has been very successful and the
country is among the top 10 markets globally for Lafarge. But going forward, we should rank higher
because of the potential of the Indian market, says Mr Martin Kriegner, CEO of the Indian branch of
the worlds largest cement manufacturer, Lafarge.

Market Size
The Indian cement sector is expected to witness positive growth in the coming years, with demand
set to increase at a CAGR of more than 8 per cent in the period FY 2013-14 to FY 2015-16,
according to the latest report titled Indian Cement Industry Outlook 2016 by market research
consulting firm RNCOS. The report further observed that Indias southern region is creating the
maximum demand for cement, which is expected to increase more in future.

The cement and gypsum products sector has attracted foreign direct investments (FDI) worth US$
2,656.29 million in the period April 2000August 2013, according to data published by the
Department of Industrial Policy and Promotion (DIPP).




OVERVIEW JAYPEE GROUP
Jaypee group is the 3rd largest cement producer in the country. The groups cement facilities
are located in the Satna Cluster (M.P.), which has one of the highest cement production
growth rates in India.
The group produces special blend of Portland Pozzolana Cement under the brand name
Jaypee Cement (PPC). Its cement division currently operates modern, computerized
process control cement plants with an aggregate capacity of (commissioned/under
commissioned) of 28.80 MnTPA in FY' 12. The company is in the midst of capacity
expansion of its cement business in Northern, Southern, Central, Eastern and Western parts
of the country and has achieved 41.40 MnTPA in total cement capacity
(commissioned/under commissioned) in FY' 13 with Captive Thermal Power plants totaling
672 MW.
Keeping pace with the advancements in the IT industry, all the 260 cement dumps are
networked using TDM/TDMA VSATs along with a dedicated hub to provide 24/7
connectivity between the plants and all the 120 points of cement distribution in order to
ensure track the truck initiative and provide seamless integration. This initiative is the
first of its kind in the cement industry in India.
In the near future, the group plans to expand its cement capacities via acquisition and
greenfield additions to maximize economies of scale and build on vision to focus on large
size plants from inception.
The Company is one of Indias leading cement manufacturers and according to statistics
published by the Cement Manufacturers Association (CMA) in March 2009 the Company is
the eighth largest producer of cement in India. Its cement division has three modern,
computerised process control cement plants with an aggregate installed capacity of 5.4
million MTPA located at Rewa in Madhya Pradesh, the largest single cement complex in
India. In addition, the Company has a blending unit with a capacity of 0.6 million MTPA at
Sadva Khurd in Allahabad District and a grinding unit with a capacity of 1.0 million MTPA at
Tanda in Uttar Pradesh.
The Company in Feb/March 2008 has commissioned 1.0 million MTPA at Chunar and Dalla
(Phase I) in Uttar Pradesh and 1.5 million MTPA at Panipat in Haryana. Company also added
2.0 MTPA integrated capacity plant at Sidhi in Madhya Pradesh, 1.20 MTPA capacity plant in
Gujarat and another 2.0 MTPA capacity integrated plant in UP taking the aggregate capacity
to 14.70 million MTPA in March 2009.
Consolidated total income of the Group contributed by the cement business amounted to Rs.
2,439 crores in the year ended 31 March 2009, compared with Rs. 2,069 crores in the year
ended 31 March 2008 (in each case net of excise duties including inter segment revenue).

Major works completed by Engineering and Construction Division 10Year Project Major Works
Completed

1974...............Ukai Dam Project Main canal; cross drainage works; tail race channel
1977...............Salal hydro-electric project Excavation of Power House; cut-off wall
1979...............Garwhal-Rishikesh chilla hydel project- Veerbhadra Barrage Channel works
and barrage works
1981...............Kudremukh Iron Ore Project Earth dam; mine road; hole dam
1985...............Brahmaputra Road Bridge Approach bank and guide bind
1986...............Sardar Sarovar package works Excavation of Sardar Sarovar Dam foundation
(1981)Fault Zone treatment (1984)Construction of blocks 1 to 20 of Sardar Sarovar Dam
(1986)
1986...............Tehri hydro-electric project Two diversion tunnels; river bed excavation;
upstream coffer dam excavation and fill placement excavation of chute spillway
1987...............Karjan reservoir project Concrete gravity dam
1987...............Indira Sarovar hydro-electric project Two Adit tunnels and Power House pit
1989...............Vishakapatnam steel plant Merchant and wire rod rolling mill; raw material
handling station; peripheral boundary wall
1993...............Chamera concrete gravity dam Concrete gravity dam
1994...............Kudremukh iron ore project Raising height of Lakya Earth Dam and
construction of tunnel spillway
1998...............Vadagam saddle dam Canal head Power House
2002...............Nathpa Jhakri hydro-electric project Construction of Power House
2003...............Baspa hydro-electric project Hydro-electric Build-Own-Operate plant
2004...............Chamera II hydro-electric project EPC Contract for Dam and Power House
2005...............Indira Sagar hydro-electric project Construction of Power House and Dam
2005...............Sardar Sarovar (Vadgal Saddle Dam) Saddle Dam Complete
2005...............Tala Hydroelectric Project Construction of Head Race Tunnel
2006...............Vishnuprayag hydroelectric project Hydro-electric Build-Own-Operate plant
2007...............Dul-Hasti hydro-electric project Dam, Power House & HRT
2007...............Tehri hydro-electric project Rock-fill Dam
2007...............Sardar Sarovar (Narmada) project Power House
2007...............Tala hydro-electric project (Bhutan) Power House
2007...............Omkareshwar Project EPC Contract for Dam and Power House
2008. Teesta- V Hydro-electric-Project (510 MW) Dam and Power House



















Cement Brands


Jaypee produces a wide variety of cements, which are specifically designed to cater to the
customers requirements for different types of cements in each of its markets. All the brands, which
the Company produces, are so evolved in their characteristics and properties that they will surpass
BIS Standards. For each brand, the relevant BIS standards are mentioned in enclosed table along
with a comparison with the BIS requirement.

The state-of-the-art cement plants operated by the Jaypee Group are equipped with the most
modern technology from the globally leading technology providers. Extensive Instrumentation &
fully automatic and computerized process control system, custom designed Quality Control
software like QSO Expert and CADES in the Mines, Cross Belt Expert Analyser using the Prompt
Gamma Neutron Activation Analysis - for the first time in India, X-Ray Fluorescence and X-Ray
Diffraction analysers and optical microscope, enable production of cement of the highest quality
consistently on a sustained basis. Jaypee Rewa Plant Quality control laboratory is accredited
laboratory from National Accreditation Board for Calibration & Testing Laboratories, for chemical
and mechanical Cement testing.

All brands are marketed in attractive HDPE bags, containing 50 Kgs of quality cement from Jaypee.
Bags are identified with a conspicuous Jaypee Logo, which also over the years has come to be
regarded as a Hallmark of quality.

Jaypee produces & markets both Portland Pozzolana Cement (PPC) & all grades of Ordinary
Portland Cement (OPC). A brief introduction of each brand is enumerated as below:-







FINANCIALS
Highlights


2012-13
(Rs. Crores)
2011-12
(Rs. Crores)
Gross Revenue 19128.67 15120.49
Profit Before Tax 925.40 1625.38
Profit After Tax 777.19 947.08

Capital Structure of Jaypee
From
Year
To
Year
Class Of
Share
Authorized
Capital
(Crores)
Issued
Capital
(Crores)
Paid Up
Shares
(Nos)
Paid Up
Face
Value
Paid Up
Capital
(Cr)
2012 2013
Equity
Share
2468.80 443.82 2219083559 2 443.82
2011 2012
Equity
Share
2468.80 425.29 2126433182 2 425.29
2010 2011
Equity
Share
2468.80 425.29 2126433182 2 425.29
2009 2010
Equity
Share
2468.80 424.93 2124634633 2 424.93
2008 2009
Equity
Share
2468.80 236.76 1183800579 2 236.76
2007 2008
Equity
Share
1030.00 234.30 1171522417 2 234.30
2006 2007
Equity
Share
1030.00 219.24 219239654 10 219.24
2005 2006
Equity
Share
1030.00 215.06 215057749 10 215.06
2004 2005
Equity
Share
980.00 176.22 176216981 10 176.22
2003 2004
Equity
Share
980.00 176.22 176216981 10 176.22
2002 2003
Equity
Share
980.00 176.22 176216981 10 176.22


















Cost of Capital

Cost of capital is the weighted average of the required returns of the securities that are used
to finance the firm. We refer to this as the firms Weighted Average Cost of Capital, or
WACC.
Most firms raise capital with a combination of debt, equity, and hybrid securities.
WACC incorporates the required rates of return of the firms lenders and investors and the
particular mix of financing sources that the firm uses.









PROFIT & LOSS Statement of JAYPEE cement Ltd.
Parameter MAR'13 ( Cr.) MAR'12 ( Cr.) Change %
Gross Sales 14,004.09 13,408.07 4.45%
Less :Inter divisional transfers 0.00 0.00 0.00%
Less: Sales Returns 0.00 0.00 0.00%
Less: Excise 706.85 624.77 13.14%
Net Sales 13,297.24 12,783.30 4.02%
EXPENDITURE:

Increase/Decrease in Stock -215.73 -53.62 -302.33%
Raw Materials Consumed 635.08 567.61 11.89%
Power & Fuel Cost 1,743.72 1,583.52 10.12%
Employee Cost 807.95 661.32 22.17%
Other Manufacturing Expenses 5,052.17 4,885.89 3.40%
General and Administration Expenses 371.89 313.87 18.49%
Selling and Distribution Expenses 1,351.32 1,212.88 11.41%
Miscellaneous Expenses 133.17 121.44 9.66%
Expenses Capitalised 0.00 0.00 0.00%
Total Expenditure 9,879.57 9,292.91 6.31%
PBIDT (Excl OI) 3,417.67 3,490.39 -2.08%
Other Income 163.01 270.58 -39.76%
Operating Profit 3,580.68 3,760.97 -4.79%
Interest 2,103.80 1,832.48 14.81%
PBDT 1,476.88 1,928.49 -23.42%
Depreciation 726.13 614.15 18.23%
Profit Before Taxation & Exceptional Items 750.75 1,314.34 -42.88%
Exceptional Income / Expenses 0.00 0.00 0.00%
Profit Before Tax 750.75 1,314.34 -42.88%
Provision for Tax 249.47 287.96 -13.37%
PAT 501.28 1,026.38 -51.16%
Extraordinary Items 0.00 0.00 0.00%
Adj to Profit After Tax 0.00 0.00 0.00%
Profit Balance B/F 3,148.48 2,868.92 9.74%
Appropriations 3,649.76 3,895.30 -6.30%
Equity Dividend (%) 25.00 25.00 0.00%
Earnings Per Share (in ) 2.26 4.83 -53.20%
Book Value (in ) 59.19 56.92 3.98%

BalanceSheet

Particulars Mar'13 Mar'12 Mar'11 Mar'10 Mar'09
Liabilities 12 Months 12 Months 12 Months 12 Months 12 Months
Share Capital 443.82 425.29 425.29 424.93 439.16
Reserves & Surplus 12888.51 11879.01 8972.08 7771.87 5951.54
Net Worth 13332.33 12304.30 9397.37 8500.72 6698.01
Secured Loan 15500.25 13234.93 13185.03 11358.01 7338.28
Unsecured Loan 4716.46 2881.36 5755.29 6408.47 5675.53
TOTAL LIABILITIES 33549.04 28420.59 28337.69 26267.20 19711.82



Assets
Gross Block 17148.69 14241.45 14770.44 12847.14 8619.22
(-) Acc. Depreciation 3991.07 3296.79 2813.56 2228.46 1801.31
Net Block 13157.62 10944.66 11956.88 10314.76 6510.60
Capital Work in Progress 5800.91 4481.52 5592.72 5247.69 5763.37
Investments 8891.27 6882.47 6483.75 5576.26 4465.20
Inventories 2977.72 4027.80 3283.31 1553.63 1228.62
Sundry Debtors 2435.08 2866.37 1300.54 2285.03 1022.04
Cash and Bank 1302.66 1022.23 2462.52 3879.18 2908.59
Loans and Advances 11428.08 10519.27 6474.31 4057.93 3351.33
Total Current Assets 18143.54 18435.67 13520.68 11775.77 8510.58
Current Liabilities 12091.68 12061.73 9059.86 6299.74 5366.79
Provisions 352.62 262.00 156.48 651.46 482.31
Total Current Liabilities 12444.30 12323.73 9216.34 6951.20 5849.10
NET CURRENT ASSETS 5699.24 6111.94 4304.34 4824.57 2661.48
Misc. Expenses .00 .00 .00 .00 3.86
TOTAL
ASSETS(A+B+C+D+E)
33549.04 28420.59 28337.69 26267.20 19711.82





RATIOS

DEBT EQUITY RATIO
0.21chg.
1.52%
PEER RANGE
0.00
67.68
CURRENT RATIO
-0.04chg.
1.46%
PEER RANGE
0.00
1,206.10
RETURN ON ASSETS
-212.00bps
1.49%
PEER RANGE
-62.59
213.24